Automakers are bracing for fresh potential chip disruption, with China's retaliatory export controls on an obscure Dutch supplier threatening to set off a chain reaction that could halt production lines.
Manufacturers in Europe are holding urgent meetings to fend off potential outages that could come within a month, according to people close to the matter.
The industry has upped inventories after the pandemic sparked previous chip shortages. But carmakers like Volkswagen AG and suppliers including Robert Bosch GmbH may take months to switch from Nexperia - the Dutch producer affected - to alternative sources, the people said, who asked not to be named because the discussions are private.
"If the situation is not resolved quickly at the political level, there is a risk of a standstill in large parts of global automotive production and in numerous other industrial sectors," said Wolfgang Weber, who heads Germany's electrical and digital industry association ZVEI.
Nexperia is the latest company caught in an escalating global trade spat leading up to China's high-stakes talks with the US. While Chinese leader Xi Jinping and President Donald Trump are to meet this month to hammer out a trade accord, both sides announced restrictions that have raised tensions.
They include US tariffs and China's move to tighten exports of rare earths that are key for auto and arms makers.
Beijing earlier this month blocked Nexperia from exporting products from its Chinese factories. The step was in response to the Dutch government seizing control of the company by invoking a Cold War-era law to ensure European access to essential products in an emergency. Nexperia is owned by China's Wingtech Technology Co., which was added to a US trade blacklist late last year.
The moves add to a simmering conflict over dominance of next-generation technologies. Beijing has pushed back against European Union import duties targeting Chinese electric vehicles, and recently moved to tighten control over its EV and battery exports. China's homegrown industry has built up a lead on EV technology partly because of strong support from the government.
While Nexperia's chips aren't considered cutting edge, they're widespread and make up a key part of the automotive supply chain, with hundreds of them in a single car. Its semiconductors help operate functions like switches or steering wheel control. The automotive sector accounts for over 60% of Nexperia's revenue, which came in at $2.06 billion last year.
Manufacturers in Europe are holding urgent meetings to fend off potential outages that could come within a month, according to people close to the matter.
The industry has upped inventories after the pandemic sparked previous chip shortages. But carmakers like Volkswagen AG and suppliers including Robert Bosch GmbH may take months to switch from Nexperia - the Dutch producer affected - to alternative sources, the people said, who asked not to be named because the discussions are private.
"If the situation is not resolved quickly at the political level, there is a risk of a standstill in large parts of global automotive production and in numerous other industrial sectors," said Wolfgang Weber, who heads Germany's electrical and digital industry association ZVEI.
Nexperia is the latest company caught in an escalating global trade spat leading up to China's high-stakes talks with the US. While Chinese leader Xi Jinping and President Donald Trump are to meet this month to hammer out a trade accord, both sides announced restrictions that have raised tensions.
They include US tariffs and China's move to tighten exports of rare earths that are key for auto and arms makers.
Beijing earlier this month blocked Nexperia from exporting products from its Chinese factories. The step was in response to the Dutch government seizing control of the company by invoking a Cold War-era law to ensure European access to essential products in an emergency. Nexperia is owned by China's Wingtech Technology Co., which was added to a US trade blacklist late last year.
The moves add to a simmering conflict over dominance of next-generation technologies. Beijing has pushed back against European Union import duties targeting Chinese electric vehicles, and recently moved to tighten control over its EV and battery exports. China's homegrown industry has built up a lead on EV technology partly because of strong support from the government.
While Nexperia's chips aren't considered cutting edge, they're widespread and make up a key part of the automotive supply chain, with hundreds of them in a single car. Its semiconductors help operate functions like switches or steering wheel control. The automotive sector accounts for over 60% of Nexperia's revenue, which came in at $2.06 billion last year.
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